It’s Friday, so let’s Fisk the Evening Standard

For part of what passes for the chattering class in the UK, the idea that having “too much” wealth is so ingrained that it comes as a shock when the right to own as much property as one can in a free society is asserted. For example, I’d be willing to bet that most “liberals” these days (I use that word in its corrupted, American sense) take it as a given that the “rich” (chose your definition) should be taxed far more heavily, proportionately, than everyone else, in order to redistribute gains that, they assume, are in some way unjustly acquired. (The fixed wealth fallacy, as our own Brian Micklethwait pointed out many years ago.)

Recently, there have been signs of dissent at the idea of heavy tax burdens on the rich. London Mayor Boris Johnson recently had a pop at high tax rates, and others have done so. This appears to have got up the nose of Richard Godwin, who writes a column for London’s Evening Standard newspaper. In a model of superciliousness, bad logic and general asshattery, Godwin lets rip:

I’m considering jacking it all in to become an entrepreneur. I reckon I’ve got what it takes. Most of my thinking falls into the blue sky category. Box-wise, I’m generally outside. People ask me to give 100 per cent, I’m like: “How about 110 per cent?” They say it’s mathematically impossible to give 110 per cent. I say: “Impossible is not in my vocabulary.”

Okay matey, we get it. You are good at taking the piss. I’m impressed.

The only barrier between “me” and “entrepreneurship” is my salary. It’s currently under £150,000. I’m working on that, 110 per cent! But I wouldn’t be affected by Labour’s proposed 50p tax rate and, as I understand it, it’s only “entrepreneurs” who come in for such persecution.

You wouldn’t be affected by the tax rate. Maybe not directly; but the point is, if you generally let it be known that anyone who has the effrontery to be paid “too much” gets at least half his/her earnings confiscated at source, that has an impact. Look beyond your own little mental universe, Mr Godwin.

No sooner did Ed Balls announce his plans to increase the levy on the richest percentile than a familiar chorus began. “What did the wealth creators do to deserve this?” pleaded the CEOs of FTSE-listed companies and the inheritors of family wealth. “Won’t someone think of the entrepreneurs?” thundered Boris Johnson, calling for the top rate to be cut to 40p. For it seems the word “entrepreneur” has changed its definition. Even the Duke of York outed himself as one recently. Before the crash, it meant someone who started an enterprise, deriving from the French verb “to undertake”. It has come to mean something like “deserving rich”. It’s how the over-£150,000s reassure themselves that their wealth is the product of their genius and graft as opposed to a specific set of social and economic conditions.

Okay, sometimes terms get used loosely, but the underlying logic is nonetheless sound: if you hit high earners with high taxes, it means the point of taking big risks is blunted. Maybe not extinguished, but nonetheless, the impact is real. Mr Godwin might as well deny that as deny that the Earth orbits the Sun.

Now, I know quite a few people who fit the old definition of entrepreneur, who have “dreamt of a new product, or a new market, and then struggled to make it happen,” as Johnson put it. When they started their businesses, they had neither the means nor the inclination to withdraw a six-figure salary for themselves. They preferred to reinvest. Some of their companies have since become very successful. However, of all the complaints I have ever heard, income tax is not one of them. The banks’ reluctance to lend is a far more pressing concern.

Nope. First, a lot of businessmen and women don’t draw a big annual salary; their income stream is highly volatile: famine one year, feast the next. If, after several lean years of building up a business, they suddenly come good, and say, half of the rewards are confiscated in tax, then the preceding risk-taking and general graft looks less worthwhile than it might have done in a lower tax environment. Time-horizons come in to play here. To increase the willingess of people to invest long term, not just in financial terms, but in terms of time and effort, the logical approach is to reduce taxes overall.

By definition, those who pay the top rate are life’s winners already.

He’s got it the wrong way round. If you have high taxes, then the chances of becoming a winner are made worse; the point of taking risks to be a winner is blunted. In any event, people who earn high salaries typically make a lot of sacrifices to get there, in my experience.

That great enemy of entrepreneurship, Margaret Thatcher, set the top rate at 60p. As successive governments have cut that, the economy hasn’t magically grown. All that has happened is that fewer people have benefited from the growth. That’s not entrepreneurship — it’s self-interest.

She set it at 60 after cutting it from a crazy level of almost outright confiscation; towards the end of her time in office, it fell further to 40 per cent, as Mr Godwin should know. He’s trying to imply that Maggie was quite happy to see the top rate at 60p in the pound. She plainly wasn’t. And the economy has grown as the top rate came down; nothing magic about it. Despite the problems of the past few years, Britain is in many ways a more entrepreneurial country than it was when Mrs Thatcher gained power in 1979.

The 110% effort of this particular wordsmith apparently does not extend to understanding the difference between a vernacular label and an economic function.

All of the initiators of enterprises are not entrepreneurs, in the strict Schumperterian application of that term.

The entrepreneur is concerned in innovation; usually with bringing together an innovation and the means for its implementation. All innovators are not entrepreneurs and most entrepreneurs are not the originators of innovations. The period of marginal gain of the successful entrepreneur is generally relatively brief.

However, since innovation is based upon “imagination” which is a province of individuality, and entrepreneurship requires individuality in order to imagine the prospects of implementation, the two functions share that common characteristic. The conflation is understandable.

It will probably comfort that wordsmith to learn that individuality is currently in recession and is to some extent being repressed by the mechanisms of governments and by the aggregations of individual interests into group interests. Taxation is one of the forms of repression.

While not dormant, innovation and entrepreneurship are currently sluggish. Additional taxation would be the reverse of catharsis; and effective catharsis would probably eliminate most current policy as well as most of its proponents.

“…I’d be willing to bet that most “liberals” these days (I use that word in its corrupted, American sense)…”

Could we please make it a point of principle to stop doing so? It is not necessary since alternatives are available (e.g. “Leftists”, “Democrats”, “Leftocrats” etc) and it is ugly in that its’ repeated use reanimates that particular word-thought corruption.

Easy to find ignorent jackanapes on the Standard’s comment pages. The barage of rubbish they published in response to Farage’s comments on women in finance was impressive – most of it from City women who didn’t take the maximum permitted maternity leave! Which kind of proved his point.

And the cut from 60% to 40% produced MORE revenue (not less revenue) just as the cut from 83% to 60%$ had.

Even if the increase from 45% to 50% income tax produced more revenue for the government (which it will NOT) why is this automatically a good thing.

Are the poor really better off in the United Kingdom (where the top rate of income tax is 45%) or in Guernsey (where the top rate of income tax is 20%)? Same currency, same culture – just different tax and government spending policies.

I am poor (and have always been poor) and I know where I would have rather been born – and it is not here in Britain.

The Evening Standard makes no sense – it is given away for free so no wonder the people who write in it have no respect for honest business (for people who try and make a profit by selling goods and services – as opposed to money just appearing from the former Soviet Union, money I hear may be running out……).

Perhaps the adverts in it make money – but that depends on the inflated property market in London created by the Corporate Welfare monetary expansion of the Bank of England.

However, in spite of all the Corporate Welfare of the Bank of England (and the other Central Banks) this farce will end. And it will end soon.

Then the pathetic “Evening Standard” (and the “Independent” and “I” newspapers) will be no more – and those who write sneering articles in them will have to go out and work.

“But writing is work” – only if people (real customers) are actually paying you for what you write.

I think the Farage broadside was Godwin as well, James. Looking at my fellow commuters who do the daily slog in and out of London for the sake of earning a living, I do wonder how the likes of Godwin are addressing the Standard’s target market. I can’t imagine many of my fellow travellers on the train home after their days’ toil can be particularly well disposed to being told they should have their earnings redistributed.

I wouldn’t read too much into the fact that the Standard is given away, many publications that make money from display advertising reach their readers through free circulation. I’d imagine it probably is struggling, but that is a problem shared by many other newspapers, most of them paid for.

On the other hand, it seems a contrary business model to give it away and then alienate the readers with the conceits of Richard Godwin and his ilk, once they have the paper open at the comment section. It would be interesting to hear an advertiser’s opinion on the matter.

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